• From: UK
  • Registered: 10/11/2009
  • Posts: 50

Topic: Tax on Purchased items in Profit and Loss Report

I have the English - Great Britain - General chart of accounts installed and by default it sets:

VAT (17.5%) to 2200 under Current Liabilities for both Sales GL Account and Purchasing GL Account.

On the Profit and Loss report there is no mention of VAT and I was thinking that this should really show up on this as it is a cost if I have paid it to my supplier or an income if I have received it from the customer.

Should these tax accounts be changed so that the sales ones goes in to an account under the sales revenue type and the Purchasing one is account is under the General and Administrative Expenses?

I hope you see what I mean?

  • joe
  • Administrator
  • Offline
  • Registered: 03/15/2007
  • Posts: 5,107

Re: Tax on Purchased items in Profit and Loss Report

Hello,
The Sales tax should be in a liability group and the Purchase tax could be in the Assets group, but is mostly placed in the liability group to keep these tax accounts together.
The taxes has nothing to do with your profit and loss report. There should be nothing about taxes here.
You owe to the tax authorities The sales tax, and you have an outstanding from the tax authorities for the Purchase tax.
You will see the sales tax and purchase tax when you run a Balance Sheet.

/Joe

  • From: UK
  • Registered: 10/11/2009
  • Posts: 50

Re: Tax on Purchased items in Profit and Loss Report

Ok, thanks for explaining it.

I will leave these accounts as they are I think as it sounds logical now you have explained it.